Question
Suppose your boss, Mr. Aldrin, is in the process of evaluating how well the company performed in terms of generating revenues and controlling costs. Mr.
Suppose your boss, Mr. Aldrin, is in the process of evaluating how well the company performed in terms of generating revenues and controlling costs. Mr. Aldrin would like to compare the actual income statement with the planning budget income statement. Could you use the variance analysis from Part 1 to persuade him, who is kind of stubborn, that the company should compare the actual income statement with the flexible budget income statement instead?
For this question, I just need to know how to advice him to compare the actual income statement to the flexible budget income. In other words, I need to know what the question is asking from because I am confused on the wording of the question. Also for this question, I had prepared an income statement variance analysis using the contribution approach income statement for the year. So what would I be comparing exactly. Please help.
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